Student Transportation Reports Fiscal 2007 Fourth Quarter And Year End Results

Toronto, Ontario, September 24, 2007 – Student Transportation of America Ltd. (TSX: STB, STB.UN) (“STA”) today reported financial results for the fiscal year and fourth quarter ended June 30, 2007. All financial results are reported in U.S. dollars except as otherwise noted.

Revenue increased 26.4% to $168.1 million for fiscal 2007. Similarly, revenue in the fourth quarter increased 21% to $45.8 million compared to $37.9 million in the same period last year.

EBITDAR* for the fiscal year grew 22.3% to $30.3 million compared to $24.8 million in fiscal 2006. EBITDAR for the fourth quarter increased 38.5% to $9.7 million from $7.1 million in the comparable period last year. STA posted net income of $1.7 million in the fourth quarter of fiscal 2007 compared to a net loss of $0.9 million for the fourth quarter of fiscal 2006. Net loss for fiscal year 2007 and fiscal year 2006 amounted to $7.1 million and $3.9 million, respectively. The increase in net loss for fiscal 2007 resulted primarily from a $2.8 million non-cash decrease in unrealized gains on derivative contracts. In addition, the net loss for fiscal 2007 reflects $9.4 of interest paid to IPS note holders as part of their distributions and non cash expense items such as minority interest, non cash stock compensation expense, amortization of deferred financing costs, depreciation and amortization expense.

The Company generated cash available for distributions of C$27.3 million (US$23.1 million) for the fiscal year ended June 30, 2007. Distributions paid during the fiscal year totalled C$23.2 million (US$19.7 million). For the fourth quarter of fiscal 2007, cash available for distributions was C$9.2 million (US$7.9 million) compared to C$6.6 million (US$5.5 million) in the same period last year. Distributions paid during the fourth quarter totalled C$6.1 million compared to C$4.7 million last year. Cash flows from operations for fiscal year 2007 and fiscal year 2006 totaled $10.1 million and $12.8 million, respectively.

“We are pleased with our results for the past year. We continue to increase our base of operations and build our regions. We anticipate another good year of growth in revenues and improved cash flows for fiscal 2008. Over the last two and a half years since our IPO, we have just about doubled our revenues and our cash available for distributions. We have increased our number of shareholders, lowered our cost of capital and begun the process to convert to a common share company with an attractive qualified dividend of C$0.56 per share.” said Denis J. Gallagher, Chairman and Chief Executive Officer. “Our plans for fiscal 2008 are to continue our growth in Canada and the U.S. witnessed recently by our new acquisition in Ontario and additional contract awards in the U.S.”.

STA’s overall performance this past year enabled the Company to raise capital to continue its growth program. During the fiscal year, the company raised a total of C$20 million in its first ever common share (TSX: STB) private placement offering and secured $35 million dollars in senior secured notes at 5.9% fixed rate for five years.

The Company’s securities, known as IPS’s, (Income Participating Securities), consist of one common share and one subordinated note per unit .The Company will continue to make the transition to a common share company through future offerings of common shares, and is reviewing another exchange offering of common shares for subordinated notes as well as potentially exercising the call feature on its subordinated notes in December 2009.

Subsequent Events

On September 5th, Student Transportation of Canada (“STC”), an operating subsidiary of STA, announced that it had acquired the Elliott Coach Lines (“Elliott”) group of companies, a local school bus operator based in Guelph, Ontario. Elliott added more than 230 vehicles, C$12 million in annualized revenue and three locations to STC’s Ontario operations. The acquisition will increase the company’s Canadian cash flows.

The Company also announced that C$45.8 million or 51% of aggregate principal amount of subordinated notes of STA ULC were tendered to its previously announced exchange offer which expired on September 4, 2007. As a result of the exchange, the Company will have a majority of common shares outstanding versus IPS units and will have reduced its total debt by approximately C$45.8 million.

Student Transportation’s annual financial statements, notes to financial statements and management’s discussion and analysis are available at or at the Company’s investor website at

Conference Call & Webcast

Management will host a conference call and live audio webcast to discuss Student Transportation’s performance for the fiscal year and fourth quarter ended June 30, 2007 at 11 a.m. ET on September 25, 2007. The call can be accessed by dialing 416-849-9305 or 1-866-838-4337. The audio webcast will be archived at A taped rebroadcast will be available until 12 a.m. ET on October 2, 2007. To access the rebroadcast, please dial 416-915-1035 or 1-866-245-6755 and enter the passcode 590685#.

Annual Meeting of Investors

STA will hold its Annual General Meeting on Wednesday, November 14, 2007 at 2 p.m. ET at the TSX Gallery located at The Exchange Tower at 130 King Street West in Toronto. The meeting will also be webcast live at STA’s web site at


Student Transportation is the fifth-largest provider of school bus transportation services in North America, conducting operations through local operating subsidiaries. Student Transportation has become a leading school transportation and management company by aggregating operations through the consolidation of existing providers and conversion of in-house operations and currently operates more than 4,500 school vehicles in North America. For more information, please visit

* Non-GAAP Measures

EBITDAR is a non-GAAP financial measure, but management believes it is useful in measuring STA’s performance. Readers are cautioned that this measure should not be construed as an alternative to net income or loss or other comparable measures determined in accordance with GAAP as an indicator of the company’s performance or as a measure of its liquidity and cash flow. The Company’s method of calculating non-GAAP measures may differ from the methods used by other issuers and accordingly, the company’s non-GAAP measures may not be comparable to similarly titled measures used by other issuers. EBITDAR represents earnings before interest, taxes, depreciation, amortizations, operating lease expense, severance expense and non cash items such as minority interest, unrealized gain / loss on foreign currency exchange contracts, and non cash stock compensation expense, and other income / loss.

Cash available for distributions is a non-GAAP measure, and is not intended to be representative of cash flow or results of operations determined in accordance with GAAP. Investors are cautioned that cash available for distribution, as calculated by the Company, is unlikely to be comparable to similar measures used by other issuers.

Forward-Looking Statements

This news release contains “forward-looking statements” within the meaning of applicable securities laws, which reflects the expectations of management regarding STA’s results of operations, expense levels, cost of capital, financial leverage, seasonality, cash flows, performance, liquidity, borrowing availability, financial ratios, ability to execute the STA’s growth strategy and cash distributions. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “track”, “targeted”, “estimate”, “anticipate”, “believe”, “should”, “plans” or “continue” or similar expressions suggesting future outcomes or events. These forward looking statements reflect STA’s current expectations regarding anticipated future events, results, circumstances, performance or expectations, including the acquisition of notes under the Exchange Offer, that are not historical facts. Forward looking statements involve significant risks and uncertainties, and should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not or the times at which or by the performance or results will be achieved. A number of factors could cause our actual results to differ materially from the results discussed, expressed or implied in any forward-looking statement made by us or on our behalf, including, but not limited to, the acquisition of less than a significant number of notes under the Exchange Offer and the factors discussed under “Risk Factors” in our Annual Information Form. These forward looking statements are made as of the date of this news release and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

For more information contact:

Denis J. Gallagher
Chairman and Chief Executive Officer
Phone: (732) 280-4200
Fax: (732) 280-4213

Patrick J. Walker
Chief Financial Officer
Phone (732) 280-4200
Fax: (732) 280-4213

Keith P. Engelbert
Director of Investor Relations
Phone: (732) 280-4200
Fax: (732) 280-4213